Terry Zupita must decide whether she should invest in Universal Autos, which is an American firm that is partnering with the Chinese government to manufacture U.S. automobiles in China. If she makes the investment, it appears that Ms. Zupita’s money will grow substantially during the next few years. However, friends and relatives have told her that UA might use child labor in its Chinese plants, and that employees often are abused in such plants. Should Terry purchase UA? If she does, she could be supporting exploitation of children and mistreatment of employees.1. Is there an ethical problem? If so, what is it?
The ethical problem in this case is a delicate but a clear one. Zupita will definitely make money from her investment but on the other hand this investment is tainted since the profit is made greater due to the usage of child labor in these Chinese plants. Working conditions will undoubtedly be far worse than in other Western countries and abuse of children is something which should be frowned upon especially if it is coming from a firm which has an American controlling interest. 2. What are the implications if Terry invests in UA?
Although the investment appears excellent at face value, the implications are quite serious. The firm which is Universal Autos can have its operations scrutinised by the Federal Complaints Commission and if it is found that its Chinese arm is using child labor, it could be struck off the register regarding sales in the US. This would result in disastrous consequences for Terry Zupita’s investment which will probably be wholly or mostly lost depending on the outcome of the investigation. Additionally the Chinese arm may not produce goods which are up to standard resulting in defective workmanship and severe effects on sales and after sales problems. 3. Should Terry invest in UA?
Although the rewards on a financial level may be great, it would not be advisable to purchase United Automobiles if the production side in China includes child labor. Apart from ethical questions, the investment could also be at risk from an investigations point of view and this would result in disaster for Terry’s investment. In this case it would be better to steer clear since the ethical conundrum would not allow Terry to enjoy her profits since these would be in a way tainted.